Articles,
touching on the persecution of the finance minister, seem to be
published on a daily basis. Many might think that the matter is
being milked to death by the media. And to some extent, that
appears to be the case. However, the fact of it is that the
outcome of the saga will have long term repercussions for the man
in the street.

DEADLINES

Annual
Duty – one calendar month to the day after the incorporation
date

Special
Voluntary Disclosure Programme
– 1 October 2016 to 31 March 2017

2016
Tax returns

Submissions
by non-provisional taxpayers at a SARS office – 25 November 2016

Efiling
by non-provisional taxpayers – 25 November 2016

Provisional
taxpayers by Efiling – 31 January 2017

Tax
returns

Tax
clients should note that unless we receive all the relevant
data and documentation at least fourteen days before the
applicable submission deadline we cannot be held responsible for
any punitive action taken against them by SARS.

Excel
Tips

If
you have a large range to select, you could click and drag with
the mouse. But dragging is slow. A quicker way is to click the
first cell in the range then use the mouse wheel to get to the
last cell in the range then hold down the shift key and click that
cell.

TAXATION

Common
Reporting Standards(CRS)

The
CRS is a set of global standards that regulate how tax authorities
in participating countries share information relating to the
financial affairs of their taxpayers. The introduction of these
standards signal the end of privacy in relation to a person’s
financial assets.

These
standards will have a profound effect on high worth individuals.
It is likely that these persons will have to comply with more
onerous reporting requirements in the not to distant future .Over
100 countries have already agreed to comply with this standard.

By
the middle of next year, financial institutions will be sending
information to the South African Revenue Services who, no doubt,
will use the data to improve its collections. Any individual, who
had an offshore investment of in excess of one million US Dollars
on 1 January 2016, will come to SARS’ attention by the middle of
next year. Any new accounts opened during 2016, regardless of the
amount, will also be reported to SARS. All other accounts will be
reported to SARS by the middle of 2018.

Any
person who has withheld information from SARS regarding their
offshore accounts, no matter how small, are urged to take
advantage of the Special
Voluntary Disclosure Programme
which will be available up to 31 March 2017.

Notional input
tax

Section
1(1)(b) of the Value Added Taxdefines notional input tax as “an amount equal to the tax
fraction… of the lesser of any consideration in money given by a
vendor for or the open market value of the supply (not being a
taxable supply) to him by way of a sale …of any second-hand
goods situated in the Republic …where the goods or services are
acquired wholly for the purposes of consumption, use or supply in
the course of making taxable supplies”.

Thus,
where a vendor acquires a business from a non-vendor, the purchase
price of a business exclusive of any amount charged for goodwill
will fall within the ambit of this section,

The
following document must be retained in support of a claim for
notional input tax:

·VAT 264 form

·Proof of
payment

·Where the
seller is a natural person, the seller’s identity document

·Where the
seller is a not natural person, a copy of the formal registration
document

BUSINESS

Scam
Alert

As
the festive season rapidly approaches so do the efforts of the
unscrupulous to deprive you of your hard-earned cash. Therefore,
it may be opportune to remind you of two of the scams in the hope
that you may avoid being a victim.

·
We
paid a cheque into your account by mistake. You repay the money
but the cheque bounces.

·
Change
of bank details. The fraudster acquires your client list and sends
them an official looking letter stating that you have changed your
bank details and providing the clients with the “new” ones.

Guard
your data as best you can.

Data
security is of paramount importance.

Protection
of Personal Information Act (POPI)

Considering
the previous article, it may be opportune to consider this act
which aims to legislate minimum requirements for the protection of
personal information by regulating how information is processed,
stored, secured and, finally, destroyed.

Although
not operational as yet, the appointment of members of the
Information Regulator were approved by parliament on 7 September
2016. Therefore, it can be expected that the act will become
effective during 2017.

It
is advisable to become fully acquainted with the provisions of the
Act and to determine at what levels you are currently compliant.
Thereafter, a programme should be put in place to implement full
compliance.

Some
steps to consider are:

·Examining
employee and third party service provider agreements to determine
whether the information contained incorporates matters that could
render you in breach of the Act

·Obtaining
cyber liability insurance to manage the risks associated with a
security beach and, specifically, infringement of the Act.

·Training
staff to recognise possible attempts to breach your business
security. It should be emphasised that user names and passwords
should not be divulged to anyone without prior authority from an
immediate superior and even then every effort should be made to
verify the authenticity of the request and the true identity of
the person authoring the release of the information.

·Devising an
easily understood security policy which should include prohibiting
the release of customer and employing information to third parties
without authorisation by a senior member of management.

·A procedure
for reporting incidents. This should include notifying all parties
whose data may have been breached in order to afford them an
opportunity to tighten their security by changing access
information such as passwords.

·Engaging an
outside firm of risk assessors

ECONOMY

The
Pravin Gordhan saga, to Mr Average SA, may appear to be so much
political hot air. However, one needs to ask oneself some serious
questions relating to the consequences of the possible outcome.

Will
a conviction for fraud be handed down and if so will that event
lead to further downgrades of the country’s credit rating. It
seems that further questions need to be answered before the
downgrade issue is addressed. Undoubtedly, if the case is thrown
out of court, the Minister’s credibility will not be impaired
and this will to some degree have some bearing on the grading
decision. But will a loss of face by the President over this issue
result in a change of policy or even a restructuring of the ruling
party which, in itself, may lead to greater investor confidence?

Looking
at the numbers quoted in the 2016 Mid Term Budget Policy
Statements it is apparent that the Ministry of Finance will find
it very difficult to raise the additional R 43 billion that its
needs to meet its expenditure targets.

Granted
there are a number of initiatives afoot to raise additional funds.
However, it is unlikely that the Special Voluntary Disclosure
Programme, the proposed changes to the legislation relating to
trusts, the sugar tax or the tyre levy will meet the amount
required.

So
where will it come from? Personal income tax, VAT and corporate
tax account for 80% of tax revenues. Raising the VAT rate will be
politically detrimental and would probably lead to civil unrest
which is presently at a high level. Further, an increase in
corporate tax rates would deter foreign investment.

The
subject of a wealth tax has been much in the news of late and this
may well be the way to go, But that may have the effect of a brain
drain which would also have a negative impact of economic growth.

Little
prominence was give to the need to combat corruption and wasteful
expenditure by government departments and State Owned Enterprises.
However, this should be targeted to make a contribution of state
coffers

Therefore,
it seems inevitable that personal tax rates will be restructured.

TAILPIECE

“Two
things are infinite: the universe and human stupidity I’m not
sure about the universe”. – Albert Einstein